The Financial Industry Regulatory Authority, best known as FINRA, fined San Diego's CUSO Financial Services $125,000 for selling highly leveraged unit investment trusts to customers, often elderly, who had indicated they had low tolerance for risk. FINRA is a nongovernmental regulator in the securities industry.
Neither the broker nor his two supervisors "understood the potential risks" of the investment trusts, many of which were sold to senior citizens, said FINRA. The firm sold $4.6 million of these instruments, and investors lost $443,000 on them. CUSO has been told to pay $47,510 in restitution.
The firm lacked "reasonable supervision," said FINRA. "The firm's supervisory system was not reasonably designed to ensure that the firm's solicitations and sales of these [trusts] were suitable for customers."